TMI Blog2023 (3) TMI 1313X X X X Extracts X X X X X X X X Extracts X X X X ..... 31.07.2021 cannot be sustained. We accept the grievance of the assessee as genuine and justified. As such, the penalty levied u/s 272(1)(d) of the Act, is hereby deleted. Appeal of the assessee is allowed. - I.T. A. No. 215/Asr/2022 - - - Dated:- 20-3-2023 - DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER For the Appellant : Sh. Gunjeet Singh Syal, Adv. For the Respondent : Sh. S. R. Kaushik, CIT-DR ORDER Per Dr. M. L. Meena, AM: The present appeal has been filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-5, Ludhiana dated 26.10.2022 in respect of Assessment Year 2019-20 wherein the assessee has raised the following grounds of appeal: 1. That on the facts and circumstances of the case as well as in law, the Ld. CIT(A) is not justified in upholding the order passed by the Ld. AO levying penalty of Rs. 40,000/- u/s 272A(1)(d) of the Income Tax Act. 2. That the Ld. CIT(A) has failed to appreciate that in the present case no direction u/s 142(2A) of the Income Tax Act was issued by the Ld. AO to the assessee with previous approval of the Pr. CIT directing the assessee to ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. CIT-DR, the Controlling Officer or the Chief Commissioner of Income, Amritsar. Hence, the adjournment application has been rejected and the ld. CIT-DR was directed to represent the case as defendant on behalf of the department in rebuttal to the contentions of the appellant assesse. Since, the Ld. CIT(DR) failed to explain the reason for failure to produce assessment record or any material evidence that the show-cause notice was issued to the assesse u/s 142(2A) of the Income Tax Act with the prior approval of the PCIT, specifying therein the specific point of special audit in the case of the appellant assessee. While granting adjournment to the department, it was clarified that if department fails to produce the assessment record or material evidence, to prove that specific points for taking special audit was mentioned in the notice issued to the assessee u/s 142(2A) of the Act with the prior approval of the Pr. CIT, it would be presumed that no such notice was issued to the assesse because the department has no evidence of service of the aforesaid disputed notice u/s 142(2A) of the Act on the assessee. 4. The Ld. CIT(A) while confirming the Penalty has observed as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed cn the following issues: 1. That the various communications sent by the AO for getting the Special Audit done were letters and not directions u/s 142(2A). 2. That prior approval of PCIT was not taken nor the assessee was provided reasonable opportunity of being heard. 3. That in the rectification order dated 07.09.2021, the AO has used the word 'letters' for various communications issued by the AO and the said communications are not directions. 4. The Special Audit u/s 142(2A) stands completed vide report dated 13.09.2021. The communications issued by the AO to the assessee have been examined. It is seen that the AO in all the communications has very clearly mentioned that the time limit to extend the Special Audit has been made in consequence to the non-compliance made by the assessee to get the Special Audit done. The AO has repeatedly pointed out that the requisite data/documents/books required for Special Audit has not been provided by the assessee in consequence to which, the date for Special Audit has been extended. Nowhere from the communications made by the AO, it is seen that the said communications are not directions but only lette ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the proceedings to continue in the cases of Antony Madassery with a direction that no final assessment order shall be passed in the matter. In the light of above, the Special Audit was conducted in the cases of Antony Madassery as well as the assessee society. This does not absolve the assessee of the non-compliance to various directions issued u/s 142(2A). The above judgments pertain to penalty levied u/s 271(l)(b) but are equally applicable to penalties levied u/s 272A(l)(d) as in both the sections, the penalty is leviable in cases of non-compliance to directions to get books audited u/s 142(2A). Hence, the contentions of the AR, in the present case, that as the Special Audit has been completed, hence the penalty order should be dismissed does not hold ground as the penalty has been levied on account of noncompliance to the directions u/s 142(2A) of the Income Tax Act, 1961. 5. The Ld. Counsel for the assesse submitted that on the fact and in law the Ld. CIT(A) was not justified in upholding the order passed by the Ld. AO levying penalty of Rs. 40,000/- u/s 272A(1)(d) of the Income Tax Act; that the Ld. CIT(A) has failed to appreciate that in the present case no direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the accounts audited by an accountant, as defined in the Explanation below subsection (2) of section 288, nominated by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner in this behalf and to furnish a report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed and such other particulars as the Assessing Officer may require. Provided that the Assessing Officer shall not direct the assessee to get the accounts so audited unless the assessee has been given a reasonable opportunity of being heard. 3. That as per Section 142(2A), for a direction to get the books of account audited by a special auditor following perquisites have to be met by the Ld. AO: a. The assessee must be provided with a reasonable opportunity of being heard. b. Prior approval of PCIT must be taken by the AO. c. Direct the assessee to get the accounts audited setting forth such particulars as may be prescribed and such other particulars as the Assessing Officer may require. 4. In the present case, penalty has been levied for non-compliance of lett ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or which the exercise of special audit was to be undertaken and the Ld. AO has admitted in order u/s 154 dated 09.11.2021 that letters dated 06.05.2021, 25.05.2021, 11.06.2021 22.06.2021 are not direction issued u/s 142(2A) but are letters in continuation of direction u/s 142(2A) issued on 24.02.2021. Therefore, there is no failure on the part of the assessee to comply with a direction u/s 142(2A). Under such circumstances, penalty u/s 272(l)(d) vide order dated 31.07.2021 cannot be sustained. 6. Per contra, the Ld. DR stands by the impugned order, However, he failed to produce the assessment record or material evidence in rebuttal as above. 7. Heard the rival contentions, perused the material on record and written submission on record. Admittedly, the AO has written letters dated 06.05.2021, 25.05.2021, 11.06.2021 22.06.2021 which are not direction issued u/s 142(2A), with the approval of Ld PCIT, as neither such particulars have been prescribed for which the exercise of special audit was to be undertaken with the prior approval of PCIT nor the assessee provided a reasonable opportunity of being heard as per section 142(2A) and proviso thereto. In ou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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